Short Sales May Offer New Alternative For Some Homeowners
With the number of foreclosures at an all time high, homeowners are in a frenzy to seek relief. While some prefer the most popular option of a loan modification, there are still a great number of those that don’t qualify and are forced into a short sale by their lender. The one thing that all of these homeowners have in common is that they currently owe more on their home than what it’s worth. Therefore, the home is considered “underwater.” In order to alleviate the stress and headaches, more lenders are offering short sales; which basically allow you to sell your home for less than what’s owed on it. The main drawback to executing a short sale is that you may be held liable for the difference. For example, if you currently owe $150,000 on your home and with help from a realtor, you short sell it for $100,000, that leaves a balance of $50,000 that the mortgage company may want to capitalize on. In some instances, the lender will seek and be awarded a default judgement on the $50,000. In other cases, they will simply write it off. The next big hurdle you will face is the IRS. They will declare that $50,000 as income and seek to collect income taxes on it. However, the good news is that with the help of a tax professional, there is a form you can file stating that you are insolvent and are unable to pay those taxes and they can be subsequently discharged. Please take note that your credit score will still be adversely affected by a short sale as some lending institutions may still view it as a foreclosure.
For more information, please contact your local short sale attorney at (888)578-3100 or at www.SchillerandKooi.com.
